Where South Africans invest their money

South Africans are investing their money in local interest-bearing portfolios, such as money market funds, while equity portfolios saw meagre inflows given the JSE’s poor performance in the first quarter of 2024. 

The Association for Savings and Investment South Africa (ASISA) revealed this in its quarterly update on the local asset management industry. 

Its data also shows that participating asset management companies achieved total net inflows of R103 billion over the 12 months to the end of March 2024.

Senior ASISA policy adviser Sunette Mulder pointed out that the bulk of the net inflows was contributed by existing investors who reinvested income declarations (dividends and interest) worth R115 billion. 

Without the reinvestments, asset managers would have reported net outflows of R12 billion for the period.

This illustrates that South Africans remain under pressure, with many refusing to increase their contributions to their investment funds or cancelling them altogether.

Mulder said South Africans continued to steer away from equities into interest-bearing portfolios, which has been a trend over the past few years. 

This shift occurred while the South African Reserve Bank hiked interest rates to the highest level in over a decade, making debt instruments very attractive. 

However, in the first quarter, this trend accelerated even further, with local investors going beyond multi-asset funds to portfolios only invested in debt instruments. 

South African multi-asset portfolios attracted net inflows of R42 billion, while local interest-bearing portfolios took R46 billion. 

Money market portfolios claimed R16 billion in net inflows for the period, while local equities unsurprisingly only saw net inflows of R3 billion.

At the end of March 2024, 18% of assets under management were held in equity portfolios, while interest-bearing portfolios held 31% of assets. Half of all assets (50%) remain in SA Multi Asset portfolios, with the rest in SA Real Estate portfolios (1%).

South African investors had a choice of 1,852 local funds at the end of March 2024, an increase of 20 portfolios from the end of December 2023.

Locally-registered foreign portfolios held assets under management of R928 billion at the end of March 2024, compared to R855 billion at the end of December 2023. 

These portfolios recorded net outflows of R27.9 billion for the year ended March 2024. There are currently 693 foreign currency-denominated portfolios on sale in South Africa.